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MBABANE – ERS Commissioner General Brightwell Nkambule wants the court to set aside the judgment of the Revenue Appeals Tribunal Eswatini (RATE) in the Usuthu Development Corporation (PTY) LTD’s tax issue; waiver and abatement of penalty.

In this case, Usuthu Development Corporation (PTY) LTD had initially made an error in the calculation of its employees Pay-As-You-Earn (PAYE) tax, by calculating the tax based on the employees’ net pay as opposed to the employees’ gross earnings. This reportedly resulted in an understatement of the PAYE tax due to the respondent (ERS). Upon realising the error, the Usuthu Development Corporation reached out to the Eswatini Revenue Service (ERS) to alert them about the error and made the shortfall payment.


ERS acknowledged the payment, but returned to Usuthu Development Corporation with a revised account summary in which it had imposed both a penalty and an interest charge in accordance with order. Usuthu Development Corporation’s documents initially showed that a PAYE tax return submitted in July 2022, reflected a taxable amount of E825 000 and a payable PAYE tax amount of E275 000. However, the corrected PAYE return reflected income of E1 235 000, which brought the payable PAYE tax amount of E411 666.67. Usuthu Development Corporation did make the payment of the shortfall to ERS on November 21, 2022. On November 23, 2022 an account summary of the amended July 2022 PAYE return was issued by ERS to Usuthu Development Corporation, advising them of a penalty at 20 per cent and interest at 18 per cent charges that had been imposed on Usuthu Development Corporation. “This was an account of the error in filling their PAYE return tax, which attracts additional tax under the Income Tax Order, 1975 (the Order).” Read Nkambule’s founding affidavit.

On November 29, 2022, Usuthu Development Corporation sought a waiver of the penalty and interest charges from the company pursuant to Section 40 (3) of the order on the grounds that the correction of the error was on the ERS’s own volition and was done in good faith as soon as the mistake was noted. ERS responded to the waiver request of Usuthu Development Corporation and denied same. The company addressed another letter to ERS expressing its disappointment at the content of the letter advising it that the waiver request has been denied.


On December 22, 2022 Usuthu thereafter lodged an appeal of the commissioner general’s decision to the tribunal per Section 15 (1) of the Revenue Appeals Tribunal Act, 2019 for adjudication on the decision to decline the waiver of the penalty and interest charged. Usuthu Development Corporation held the view that to impose the maximum penalty available was a harsh response by the ERS and, therefore, sought a waiver. Citing mainly that it voluntary complied with its non-compliance and caused no loss to the fiscus. On its insistence that the penalty was not fair, the Usuthu Development Corporation (PTY) LTD approached the tribunal to consider its waiver request in light of its circumstances, which it argued warrant a lesser penalty.

However, ERS argued mainly that a waiver of penalties imposed in terms of Section 58, read together with Paragraph 2 of the second schedule of the Income Tax Order (ITO), may only be where the commissioner general was satisfied that the employer’s failure to remit the amount was not due to an intent to postpone the payment or evade the obligation under the Order.
ERS denied the waiver request, which from context was translated to mean that the ERS was not convinced of the lack of the appellants’ intention not to postpone the payment or evade its obligation under the order.


Upon listening to the matter, the tribunal, whose coram was formed by John Henwood, Khethiwe Dlamini and Ntombenhle Shongwe, therefore, made the following orders; the commissioner general’s decision to deny the waiver application without reasons was set aside; the appellants’ request for a waiver and penalties was granted in toto and the penalties and interest applied to the appellant’s account were to be reversed forthwith. The judgment of the tribunal was delivered on July 12, 2023. However, on July 24, 2023, the ERS commissioner general filed an application for the court to grant an order to review, correct and set aside the judgment of the Revenue Appeals Tribunal under Case No. RATE/IT004/22 dated June 12, 2023 on the basis that; in deciding and determining the appeal brought before it by the Usuthu Development Corporation (PTY) LTD’s, the tribunal acted ultra vires the Revenue Appeals Tribunal Act of 2019, with specific reference to Section 17 (5) (a) and (b) of the Act.

The commissioner general argued that the tribunal in considering the appeal, focused on whether the respondent (Usuthu Development Corporation) herein, had sufficiently established lack of intent either to defraud the revenue or to postpone the payment by the respondent of the tax chargeable on the part of the respondent to sufficiently satisfy the commissioner general to waive the penalties in part or in full.


He further told the country that in considering the above question, the tribunal also focused on determining whether the respondent herein met the legal requirement to qualify for the waiver that the Order makes available to the respondent in sections 40 (3) and Part II (6) (1) of the Second Schedule of the Order where circumstances under which the commissioner general may waive or remit a penalty are clearly spelt out. The commissioner general averred that the tribunal held that there was no evidence indicating that indeed the commissioner general applied his mind after having considered all the surrounding circumstances and the relevant legislation before denying the waiver request in casu. He argued that it was, therefore, the ERS’s view that the matter should be considered as one in need of a review on the decision of the tribunal to set aside and not to remit the matter to the commissioner general to consider the amount of penalty and interest imposed on Usuthu Development Corporation.